For the last 13 years Zalma's Insurance Fraud Letter has argued that the insurance industry, the states, and the federal government must work together to maintain a strong anti-fraud effort.  The argument has mostly fallen on deaf ears because insurers and the prosecutors believed it was cheaper to pay off the fraud perpetrators than to move forward with a strong anti-fraud effort. Dennis Jay, on the Insurance Fraud Blog, at http://www.insurancefraud.org/blog/ reports that the common wisdom about anti-fraud efforts is false.   He reports about the success of a small anti-fraud efforts in Massachusetts that has shown astounding reports.

According to Dennis Jay: Since the state launched focused fraud-fighting efforts in 11 communities, claims have fallen $278 million, mostly because of lower medical provider billings -- and that’s only for auto insurance. Workers compensation and health insurance probably benefited as well, as many rogue chiropractors and other providers closed up shop. The most dramatic declines were in Lawrence, Mass., where staging car crashes has long been a way of life for many citizens. Injury claims per 100 accidents dropped from nearly 140 to about 50 over the last four years. Medical billings from auto accident injuries declined from $9 million to less than $1 million in the city.

The crackdown on fraud, in a report in The Eagle Tribune, showed that in 2003, there were "more than $9 million in claims attached to 22 chiropractors and physical therapists, all of whom billed insurers more than $100,000 a year." After the crackdown, by 2007, only four chiropractors and no physical therapists billed more than $100,000 a year. If this program was applied nation-wide insurer profits will increase, insurance rates will come down, and insurance claims personnel can spend most of their time providing service to honest insureds and claimants and less to defeating fraudulent claims.

Having an aggressive anti-fraud program with the cooperation of state prosecutors and the insurance industry works. Fraud is a crime that can only survive if it is ignored. It is popular because it is seldom prosecuted and punishment, when prosecuted, is seldom severe. With a focused anti-fraud program the fraud perpetrators will be forced to make an honest living or attempt to defraud businesses that are neither insurers nor insured.

Zalma's Insurance Fraud Letter can be accessed at http://www.zalma.com.